Fund Types & Responsibilities for Homeownership Costs

Introduction

Not only is it important to make an informed decision, and smarter financial investment when purchasing a home, but families, couples, and singles must allocate accordingly for expenses and unexpected costs that they may have not considered when identifying and purchasing a home initially.  Although the ambiguity between renting and buying may exist, allocating accordingly and choosing a home that matches your budget, needs, and strengths is usually the most effective long-term option.  

While renting may be less time consuming, and include less daunting out of pocket costs, property continually appreciates in most areas and regions.  If you’ve identified the right home and purchased accordingly based on information you’ve obtained, such as what is included through a Home Fax Report from Nationwide Home Fax, you’re probably already aware of these home ownership responsibilities and expense examples. Nevertheless, you can never be too prepared for your next purchase, so consider the following: 

Maintenance Costs 

As most home buyers intend to purchase a home as a long-term investment, maintenance and up-keep costs come with the territory of owning a home for an extended period of time. When purchasing, seek to find any high costs issues that may arise shortly or in the future. Most roofs, for example, have reached the end of their service life after approximately 20 years. If you can determine the current condition of the roof and understand the last time it was replaced, you can better allocate for this $5,000-$7,000 future cost. 

For example, if the current roof of your potential home is in above average condition, and was recently replaced 5 years ago, put away $7.70 each week into your “roof fund.” In approximately 15 years, when your roof now needs to be replaced, you will have saved $6,000 for the high-end cost that may have otherwise crippled your savings account and out of pocket costs.  In the meantime, keep up on your home and complete small tasks, such as adding a 5’ downspout extension to each gutter to alleviate the amount of water that continually runs into your foundation.  This is one of the easiest, cost effective maintenance tasks that can save you thousands in the long-run. 

Property Taxes 

Renters have the benefit of not paying property taxes, as they do for most maintenance tasks and costs, but when allocated properly, summer and winter taxes can become less burdensome. Understand the summer and winter tax amount prior to purchasing a property (and ensure no liens exist prior to acquiring the deed and title to the home). 

Most conventional mortgages allow homeowners to roll over their property taxes into their mortgage, although this does vary by loan type, property acquisition type, and state.  Property taxes are allocated by the township, not the bank, but many homeowners do not plan accordingly as they see a mortgage cost that is equivalent, in many people’s minds, to a rent payment. Even if your property taxes are not rolled into your mortgage, understand the amount to set aside each week to avoid these last minute costs.  If, for instance, your total annual property taxes are $1,450 per year, put $27.88 into your “property fund” each week, and your tax amount is paid in full when it comes to that time.  

In addition, one aspect of mortgages that people do not consider, or are unaware of, is that mortgage interest is able to be written off on your annual taxes. Do yourself the favor and obtain what you’ve paid for, and you’ll see a portion returned to you that can be allocated into your necessary “fund” types.  

Conclusion 

The fact of the matter is Know the Home Before You Buy, and let professionals, such as Nationwide Home Fax, guide you in the process and help you potentially save you thousands of dollars in the long-run.  If you’ve made an informed decision, partnered with the right professionals, formulated a strong action plan, and allocated for your “fund types”, owning is almost always the better option compared to renting. Check out www.NationwideHomeFax.com for more information and to make an informed decision in your next home purchase.